Posted on July 2, 2009 by Sandra C. Fava

NEW DEVELOPMENT IN FAMILY LAW ARBITRATION

Previously both Jennifer Millner Weisberg and I blogged on a highly publicized New Jersey family law case, Fawzy v. Fawzy.  To read my prior post on this case, click here.  To read Jennifer's post, click here. 

For those of you who may not be familiar with Fawzy, this matter involves parties who opted to participate in binding arbitration as to all outstanding issues in their matter, including a determination of custody and parenting time, as opposed to proceeding with a trial.

Alternate dispute resolution is another method by which parties who have outstanding legal issues between them can select a mutually agreeable individual to serve as a mediator and decide the issues, rather than sit through and bare the expense of an expensive and often lengthy trial.  Alternate dispute resolution methods, such as arbitration, are available in nearly every area of the law and not limited to family law matters. People prefer arbitration because it may resolve issues more expeditiously than otherwise having a trial.  In addition, the arbitration process can be more informal than deciding issues in a courtroom before a judge.  Our courts encourage arbitration as a substitute for litigation.  Arbitration conducted by an individual of the parties' own choosing is often less antagonistic than litigation and may minimize the harmful effects of divorce litigation on a family.

In Faherty v. Faherty, 477 A.2d. 1257 (1984), the New Jersey courts approved the arbitration of alimony and child support issues.  So when the Fawzy's decided to arbitrate the issues of custody and parenting time- what was the problem?

Well, the answer is nothing, at first. However, after the arbitrator issued his decision, Mr. Fawzy filed an emergent application seeking a review by the trial court of this decision. When the trial court denied his request, he filed an appeal with the Appellate Division. The Appellate Division held that custody and parenting time issues cannot be submitted to binding arbitration. Mrs. Fawzy then filed a petition for certification with the Supreme Court of New Jersey and Mr. Fawzy cross-petitioned. That all occurred last summer. In February the Supreme Court heard oral argument on the matter and on July 1, 2009 their written opinion was published. To read the entire opinion, click here.

It has long been found that the right to parent a child is constitutionally protected and one of the fundamental rights of this country. However, this right is not absolute. Under the parens patriae doctrine, the state has an obligation to intervene when necessary to prevent a child from being harmed. The harm standard is a constitutional imperative that allows the state to intervene in what is otherwise a protected arena of parent-child relations.

In focusing on this fundamental right to parent a child, which includes decision making on behalf of a child, the Supreme Court held that parental autonomy includes the right of parents to choose the form in which to decide their disputes over custody and parenting time issues. This forum includes arbitration. In fact, the majority of states in the US have already addressed this issue and have concluded the parents may submit the issues of custody and parenting time to arbitration in the exercise of their parental autonomy. Just as parents choose to decide day-to-day issues among themselves, they may also decide to sidestep the judicial process by utilizing an arbitrator. This options allows parents to select an individual based on his/her familiarity with the family or understanding of the values that the parents may hold dear and have tried to follow when raising their child.

The right to submit these issues to arbitration is not without boundaries. Fawzy now tells us that: 1) an agreement to arbitrate must be in writing or recorded and must establish that the parties are aware of and have knowingly and voluntarily waived their rights to a trial; 2) a record of documentary evidence adduced during the proceedings must be maintained; 3) testimony must be recorded; and 4) the arbitrator must issue findings of fact and conclusions of law with respect to the award. The arbitrator's award is subject to review under the Arbitration Act, N.J.S.A. 2A:23B-1 to -32, except that a judicial review is also available if a party can establish that the award threatens harms to the child.

What exactly is the standard of judicial review? Where no harm to the child is threatened, there is no basis to infringe upon the parents' choice to be bound by the arbitrator's decision and the parties are limited to the Arbitration Act's remedies. If a prima facie case of harm is advanced, the court must determine the harm issue. If no finding of harm ensues, the award is only subject to review under the Arbitration Act standard. If the court finds harm, the presumption favoring the parents' arbitration choice will be overcome and the court must decide what is in the child's best interests.

To ensure an accurate record is kept, the decision dictates that a verbatim record must be kept of those portions of the arbitration proceedings that relate to custody and parenting time issues only. In addition, the arbitrator must also state in writing or otherwise record findings of fact and conclusions of law with a focus on the best interests standard. An arbitration award regarding custody and parenting time issues that is a result of any other procedure not specifically mentioned herein will be subject to vacation upon motion.

What does Fawzy mean for family law practitioners? It provides another forum to decide issues in what tends to be a more informal, less intimidating, and sometimes faster manner than traditional litigation. Practitioners must be mindful of the specific requirements to the arbitration of family law issues so as to protect the determination.

What does Fawzy mean for litigants? Again, it provides another forum to decide those issues in what may be a more informal, less intimidating and sometimes faster manner than traditional litigation. It also puts mechanisms in place so that the decision of the arbitrator is final and if the rules set forth herein are followed, the decision may be protected assuming there is no harm to the child.
 

EDITOR'S NOTE:  IT WILL BE INTERESTING TO SEE HOW THIS PLAYS OUT IN PRACTICE.  REQUIRING VERBATIM RECORDINGS AND SPECIFIC AND COMPREHENSIVE FACT FINDINGS WILL ADD A NEW LEVEL OF COST TO THE MATTER. RECENTLY I HANDLED A 10 PLUS DAY ARBITRATION WHERE THE COURT REPORTERS FEES WERE MORE THAN $25,000.  THIS COST IS IN ADDITION TO THE COST OF THE ARBITRATOR WHO WILL PROBABLY CHARGE BETWEEN $325 AND $575 PER HOUR.  MOREOVER, I SUSPECT THAT THE LOSING PARTY WILL SIMPLY ARGUE HARM, ATTEMPTING TO MAKE BINDING ARBITRATION NON-BINDING    ERIC S. SOLOTOFF
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Posted on February 5, 2009 by Jennifer Weisberg Millner

The New Jersey Supreme Court Hears Arguments in Arbitration case

On Tuesday, February 3, the New Jersey Supreme Court heard arguments on the Family Law case of Fawzy v. Fawzy. This case was originally reported by Sandra Fava of our Roseland office this past summer when the Appellate Division determined that a court did not have the ability to permit parents to submit to binding arbitration on the issue of custody. To read Sandra's original post, click here.  To read the full text of the Appellate Division's decision in the case, click here. 

The Supreme Court granted certification. Both sides offered excellent arguments for and against the issues.

In this case, Mr. and Mrs. Fawzy agreed, in the courthouse, and in front of a judge, to submit the issue of custody to an arbitrator.  As Sandra mentioned, the parties were scheduled for a trial date in early 2007.  When they appeared in Court on this date, they agreed to submit all issues in contest to an arbitrator for binding, final, non-appealable arbitration pursuant to this state's statute governing arbitration (N.J.S.A. 2A:23B1 to 32).  They, along with their respective attorneys appeared before the judge that same day and placed this agreement on the record.  The judge clearly advised them that the arbitrator's decision would be final and could not be changed.  The parties agreed and went forward. They went to a well respected arbitrator who specializes in family law. Subsequently, Mr. Fawzy, who did not like the way things were going, moved to vacate the arbitrator’s decision, contending that issues such as the custody of children could not be subject to arbitration. The Appellate Division agreed. 

 

But what of the future? Arbitration can proceed with the same formality as a court trial or in some cases, with a more relaxed structure. However, the process is something that is agreed to by the parties in advance order to insure fairness. In a nutshell, the strong public policy in New Jersey is such that the Courts favor settlements between parties through alternative dispute resolution, of which arbitration is one example. In arbitration, the parties agree to have an arbitrator, rather than a judge, decide issues. There are many instances other than the matrimonial context in which arbitration is utilized and has been for many years in New Jersey. There are laws concerning the use of arbitration. However, it is only in the relatively recent past that arbitration has been commonly used to resolve matrimonial issues. This is obviously due to the sensitive nature of family proceedings. At the current time, there is no statute which specifically governs arbitration in family cases.  Utilizing arbitration for custody seems to be the next logical step in alternative dispute resolution for matrimonial cases.

 

The central issue is whether a judge, who stand in a parens patriae, or protective role, can in effect delegate his or duty to make a determination as to custody to an arbitrator. There have been previous cases in which the courts have been prohibited from allowing a parenting coordinator from making decisions as to custody and parenting time. Is it right for  litigants to be able to agree to allow a third party other than a judge the authority to make a custody determination on these issues? There are certainly arguments for and against.

On the one hand, the court system is fraught with delays and scheduling difficulties. Consecutive day trials are in effect non-existent which makes an already painful divorce take a long period of time with it’s stops and starts. Arbitration can offer a faster, more efficient method to resolve issues. As the parties have to pay the arbitrator, it may or may not not be less expensive. However, arbitration, both binding, and with a right to appeal has been successfully utilized by many litigants for the financial aspects of their divorce.

So then, should the ability to utilize arbitration be extended to custody and parenting time issues? There was certainly an acknowledgment that arbitration may be an effective way to resolve these issues. However, I am sure that before arbitration is permitted in this area, there must be safeguards in place to assure that there a mechanism to make sure the children are protected in the event of an arbitration decision which is contrary to the best interests of the child(ren). Litigants currently have a right of appeal from a trial court’s decision, and it seems reasonable that there should be a method to make sure the children’s best interests are protected in the event of an arbitration decision which is may be erroneous. This may be an area where arbitration is appropriate, but binding arbitration may not.

The issue of what is an appropriate requirement for record keeping must be addressed. There may be requirement to have the session recorded so that a reviewing court can later have a way to understand what happened at the arbitration. Is there a basis for requiring special training for an arbitrator who will be involved in these types of cases? Should there be specific requirements of the arbitrator in connection with a decision? Should it be written? Should he or she have to make specific findings as a judge does? These are all questions that the legal community are waiting to be answered. I look forward to reporting back to you once the Supreme Court speaks.
 
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Posted on June 17, 2008 by Sandra C. Fava

Custody and Parenting Time Can NOT be Subject to Binding Arbitrated

This week in an opinion published by the Appellate Division, the Court  held that parties in a matrimonial action cannot agree to binding, non-appealable arbitration of child custody and parenting time issues.  Any such agreement would violate the Court's parens patriae obligation to protect the best interests of the children.

In the matter of Fawzy v. Fawzy,  the parties were scheduled for a trial date in early 2007.  When they appeared in Court on this date, after several hours of discussion, they agreed to submit all issues in contest to an arbitrator for binding, final, non-appealable arbitration pursuant to this state's statute governing arbitration (N.J.S.A. 2A:23B1 to 32).  They went before the judge that same day and placed this agreement on the record.  The judge advised them that the arbitrator's decision would be final and could not be changed.  The parties agreed and went forward.

The parties selected an arbitrator and began the process.  After several days into the proceeding, Mr. Fawzy sensed things were not going well for him and filed an emergent application with the Court to restrain the arbitrator from making a custody and parenting time award.  His argument was that these issues could not be arbitrated as a matter of law.  The trial judge denied his application.

Shortly thereafter the arbitrator issued a custody and parenting time award in Ms. Fawzy's favor.  Mr. Fawzy retained new counsel and filed a second emergent application seeking to vacate the arbitration award, disqualify the arbitrator, restrain the arbitrator from any further participation, require a de novo review of the reward and stay the award pending appeal.  The trial judge once again denied his application and entered an amended judgment of divorce confirming the arbitrator's award.  Mr. Fawzy then filed his appeal.

On appeal, Mr. Fawzy argued that as a matter of law, parties cannot bargain away the Court's obligation to review the best interests of the children by agreeing to binding arbitration of custody issues.  The Court noted that it was troubled by the fact that Mr. Fawzy did not make any claims that the award would cause harm to his children or in any way endanger their health, safety or welfare.  Despite that concern, the Court agrees that parties to a matrimonial matter cannot enter into an agreement to submit custody issues to final, binding, non-appealable arbitration.

While our courts have endorsed arbitration as a favored remedy and have encouraged the use of various alternative dispute resolution devices, the question of whether child custody could be submitted to final, binding arbitration has not before been addressed by the Court.  The Court has favored the use of final, binding arbitration for alimony disputes as seen in the 1984 opinion of Faherty v. Faherty, however they did not address the issue of custody directly at that time.

In conclusion, the opinion notes that while the development of a more workable custody arbitration process may be more beneficial to both the parties and the children involved in a matrimonial action, the Court ultimately must defer to their traditional parens patriae role.  That role requires the trial court to determine the best interests of the children regardless of any agreement for arbitration as to custody and parenting time.

While binding arbitration is a viable and useful alternative to litigation for the purpose of resolving financial issues related to equitable distribution and alimony, issues concerning and relating to the best interests of a child cannot be submitted to binding, final arbitration.  When considering arbitration as an alternative to traditional litigation, make mental note of its restrictions.

 

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